Outsourcing is the outsourcing of certain functions to another company based on a contract. Usually, non-core functions of the organization are transferred: transport services, advertising, cleaning, marketing, and security. Outsourcing companies may outsource positions that are not profitable to keep in the main staff.
Types of outsourcing
- Accounting outsourcing
It is this type of outsourcing work that is used most often.
- Production outsourcing.
The client organization outsources part of its production chain or the entire production cycle to a third-party company.
- IT outsourcing
Not all organizations can provide an experienced professional permanently. Usually, small companies need an IT specialist to create a website once and only maintain it from time to time. Keeping such a specialist on staff is not profitable, so for many IT tasks, for example, outsourcing PHP development, it is better to hire an outsource company.
- HR outsourcing
HR outsourcing is used by companies who seldom look for personnel and want to save on full-time HR, and by large companies looking for top managers or area experts.
- Outsourcing legal services.
Pros and cons of outsourcing
Let’s start with the nice things. The advantages of outsourcing:
- You only pay for what you get. A full-time employee needs to be paid for holidays, sick pay, meals (in some organizations), bonuses, and benefits. When you outsource, none of this applies to you. You only pay directly for the services provided.
- Savings on short-term projects. Creating a website or a brand book is a short-term project. Why hire employees for such a task, when you can hire a team of specialists to do everything quickly and efficiently for a while.
- Increasing the quality of the product. Finding qualified personnel for some positions is not always an easy task. An outsourcing company can help you and provide the right person right now.
- Responsibility on the doer. If an employee makes a mistake, he or she can be fined, but the mistake will have to be corrected, wasting money and time. On the other hand, the outsourcing company corrects any mistakes itself, according to the contract.
Outsourcing also has disadvantages:
- The risk of high expenses. Outsourcing services are not cheap. If a company outsources too much work, there is a risk of spending even more than keeping a full-time employee. Delegate smartly.
- Risk of bankruptcy. Outsource company may go bankrupt and suspend its operations while you are carrying out your tasks.
- Loss of control. The outsourcer and the client company are bound by the outsourcing agreement that they signed at the beginning of their cooperation. Unless you have taken into account some points in the contract, the outsourcer will not be obliged to listen to you and solve problems that arise.
- Information security. To avoid corporate data leaks, you should stipulate a non-disclosure clause in your contract with your contractor. This way you can get compensation through the courts.
- Lack of flexibility. You will not be able to change contracted tasks on the fly. This can cause difficulties when changing business processes.
- Checking the skill level. When you choose a staff member, you check their competence and decide whether or not to hire them. In the case of outsourcing companies, the level of employees is not always known, so you have to choose the company carefully.
Outsourcing services is a new round in doing business, with its advantages and disadvantages. With proper planning of funds and tasks, it is possible to significantly save resources by outsourcing tasks to outside companies. To minimize all risks, pay special attention to the preparation of the terms of reference and the cooperation agreement.
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